Control Framework A warm Welcome to the September market Breakfast Group

Control Framework Breakfast Group agenda 9:00Arrival, breakfast & networkingAll 9:20 WelcomeAli Dove 9:25Lloyd’s Delegated AuthoritiesLindsey Davies Audit scope changes Audit coordination pilot Atlas 9:40Phase II progress & ResponsibilitiesJaana Rouvari of lead vs. follow 9:55Broker conference updateJohn Hibbert 10:05Integro – A broker’s view into the Dan Lott Control Framework 10:20Q & A All 10:30Close Ali Dove

© Lloyd’s Lindsey Davies Lloyd’s delegated authorities 3 Control Framework Audit scope changes Audit coordination pilot Atlas

© Lloyd’s Progress on Phase 2 4 Control Framework August 2013 September 2013 October 2013 November 2013 December 2013 Initial meetings with managing agents Managing agent has project resources in place Coverholder risk rating exercise Risk ratings reflected in audit schedules Confirm delivery timeline to Lloyd’s

© Lloyd’s Lead vs. follow 5 Control Framework You said… The lead should… Include Control Framework audit questions in the audit scope Carry out the audit and share findings with follow Coordinate communications with broker and coverholder Where you follow… You have limited power to influence Rely on the broker to provide you with information (distribution of bordereau, audit reports, etc) Controls available are limited, confidence in your lead is key

© Lloyd’s Lloyd’s listened 6 Control Framework The lead managing agent takes the responsibility for the Control Framework This includes: Risk rating exercise Performing a gap analysis Assessing sufficiency of controls Remediation Organising coverholder audits Communications with the broker or coverholder What about conflict of interest between the lead and the follow?

© Lloyd’s Broker conference 17th September Control Framework  53 Broking organisations registered out of 115 individual firms who operate in the binder space.  That represented 87% of the £4.2 billion GWP on a calendar year basis for 2012  Actual attendees on the day represented 70% of the 2012 GWP and they were joined by LIIBA  31 out of the top 40 BROKERS by GWP

© Lloyd’s What was the feedback from the day 8 Control Framework  What if two MAs risk rate a C/H differently? Red vs Green  Have the specific CFII audit questions been issued?  Relative to LLOYD’S 2025 vision. How fluid and/or flexible is the framework ?  Very appreciative of the early engagement by LLOYD’S  Will there be a reach out to all brokers?

© Lloyd’s Integro – Dan Lott Brokers’ view into the Control Framework 9

© Lloyd’s Lloyd’s Control Framework The Control Framework is a positive step in the right direction for Brokers and for Coverholders… 10

© Lloyd’s What is our role?  It is the Managing Agent’s responsibility to comply with the Control Framework but, as Lloyd’s Brokers, we have an important role to play:  Communication  Co-ordination  Pace-making 11

© Lloyd’s What do we need to do? 12  Understand the Control Framework - Phase II FAQs; Website  Be prepared:  Are you a Coverholder? Do the right people in your organisation know about the CF?!  As a Lloyd’s Broker, what (if any) processes do you undertake? e.g. validating data / supplementing data / holding data  Expectation management is key! How will you introduce this to your Coverholders?  Audits are likely to be carried out on many Coverholders  Start the dialogue early. Remember – this is nothing new!

© Lloyd’s Who can we talk to? 13  In the first instance, talk with your Managing Agent(s)  Mark Knight at LIIBA  The Project Team at Lloyd’s  It’s good to talk!

© Lloyd’s Q & A 14 Control Framework

© Lloyd’s15 Control Framework Close Further information on Control Framework – Control Framework Phase I end of project celebration – Thursday 26 th September Next Breakfast Meeting – Tuesday 22 nd October